D.R. Horton, Inc. (NYSE:DHI) Q3 2023 Earnings Call Transcript

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Bill Wheat: Right now, as we look at the components of the home across the materials, it is primarily lumber right now. There are some minor moves in both directions, really across the other components of the homes. It’s primarily lumber there. I think we are on the front edge of starting to realize some improvement in labor as the homes that we have been starting over the last quarter or two have been at a lower cost than what we had there for a while. But I think we still expect a bit more improvement there with lumber. And then really, the forward cost structure really depends on what the capacity of the industry is and what all builders are doing. So, a bit more improvement there, but as we continue to add scale, which does include our rental platform as well, we definitely have advantages and opportunities to continue to leverage that to drive our cost structure down, especially relative to the rest of the industry.

Carl Reichardt: Okay. Thank you, Bill. And then David, the private builders we’re talking to, we’ve seen sort of — you mentioned normal seasonality to a slower market maybe than they had expected starting the summer. I don’t know if that’s just the particular vagaries of being small and private. They can’t — harder to buydowns, more capital constraints to do higher-end. But you purchased a private during the quarter and you’ve got presence in a lot of markets where the smaller privates really make up the bulk of your competitors, in some cases, all of them. Has there been much movement in terms of interest willingness or need to sell among the privates right now, just given what they’re facing relative to what the publics have advantage-wise? Thanks.

David Auld: Carl, we talk about it a lot, seems like in the last couple of years, but it is really hard to put a lot on the ground. It is really hard to build houses. And these private guys, now, they’ve got to struggle with capital from either private or banks increasing in cost. So, do we have the opportunity to talk to a lot of these guys? Yes, we do. But it’s going to take unique opportunities for us to invite them into the family, because we do have a special culture here and we’re not going to screw it up trying to force a square peg in a round hole.

Jessica Hansen: Excited about the most recent [indiscernible] Truland in terms of already having been one of our largest lot developers in our Gulf Coast region. And so, we picked up Truland’s homebuilding operations, but Nathan Cox and his team will continue to be a key component in terms of developing lots to us and for us in the Gulf Coast.

David Auld: And I will say, I’ve had a personal relationship with Nathan Cox for 15 plus years, and he is an example of somebody that absolutely mirrors our culture. He’s a super quality guy. He’s built a good company, and somebody who we’re going to be in business with for a long, long time.

Carl Reichardt: Great. I appreciate it. Thanks all.

David Auld: Thank you, Carl.

Operator: Thank you. The next question is coming from Mike Rehaut from JPMorgan. Mike, your line is live.

Mike Rehaut: Great. Thanks. Appreciate it. I wanted to circle back to an earlier answer that you gave around — thoughts around your 4Q demand and order trends. Last month, you had Lennar talk about their third quarter orders being a little bit above 2Q and KB talking about normal seasonality being muted in the third — in their third quarter, all based on not only strong demand but also kind of filling a void for the lack of supply that’s out there and the strong demand that new homebuilders can provide as a result. So, just going back to your comments, I think, Bill, you kind of said, perhaps normal seasonality. David, I think I heard you say perhaps better than normal seasonality. I was hoping to kind of get a finer-tuned answer there in terms of what you think your capacity is to meet demand.

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